Rising raw material cost to push up feed meal price

The price of feed meal is expected to increase by 5-10 per cent late this year prices of raw materials have shot up by 15-45 per cent, according to the Thai Feed Meal Association.

The hike in the price of feed meal will lead to a rise in the price of livestock.

"Rising oil prices and the impact from climate change are major factors driving up feed-meal and raw-material prices," said Pornsilp Patcharintanakul, chairman of the Board of Trade's agriculture and food business committee and president of the association.

He said the association would ask the Internal Trade Department to increase the retail price of feed meal in the second half of the year as the oil price is projected to reach US$100 (Bt3,000) a barrel.

The prices of major raw materials have surged consistently since last year as the climate-change factor has reduced production. For instance, the price of maize has gone up to Bt9 per kilogram from Bt7 last year, the price of cassava is at Bt3.50 from an average of Bt2.80-Bt2.90 a kilo, and the soybean price is at Bt15 from Bt12-Bt13 a kilo last year.

However, to alleviate the cost of feed-meal manufacturing while also freezing the retail price, Pornsilp said the government might consider waiving import tariffs on 21 raw materials.

The association has proposed to the Agriculture Ministry that it consider waiving tariffs for 21 goods, including soybean meal, green pea, beef pulp pellet, palm meal and canola meal, among others, from an average tariff rate of 2-10 per cent.

He pointed out that the government was expected to lose about Bt1.5 billion in revenue by waiving the import tariffs.

Pornsilp said that waiving off the import tariff would reduce the skyrocketing price of manufacturing. Moreover, the association urged the government to increase or eliminate import quotas for 23 products under its commitment to the World Trade Organisation.

The average tariff under the WTO's quota is 20 per cent, and outside is at 70 per cent.

Seree Denworalak, president of the Thai Tapioca Traders Association, said cassava output this year would be about a million tonnes lower than the targeted 22 million tonnes because of recurrence of a plant-disease outbreak.

The price of cassava is expected to average Bt3.50 a kilo this year, while tapioca chip, which is used by the feed-meal industry, will be Bt8 a kilo, up from last year's Bt5.

The plant disease will mean lower export of tapioca chips this year, from 4 million tonnes last year to 3 million tonnes. However, export incomes will be unchanged or will drop only slightly because of increased product value.